Yesterday, in a landmark settlement, America's Consumer Financial Protection Bureau (yes, that CFPB) required Capital One Financial
And what "capital" offense was it that laid the banker low?
According to CFPB, Capital One's telemarketers used "deceptive marketing tactics" to sell customers such credit card bells and whistles as identity theft protection, credit monitoring, and payment protection (where the card company makes your minimum payments for you in the event of job loss or illness).
Whether these services have value is a matter of some debate. For example, a consumer can generally hold off on activating ID theft protection until the moment a data theft actually occurs. There's really no need to pay for the service month after month in the absence of an incident.
What's not in debate is that in selling these services, at least some of Capital One's vendors crossed the line, falsely telling cardholders that buying the services would "improve their credit scores" or that they would be provided free of charge.
In Capital One's defense, the company appears truly remorseful about the incidents, and admitted it did not keep close enough watch over what its vendors were telling its customers. The bank made the further stand-up statement that "we are accountable for the actions that vendors take on our behalf." This is a notable departure from most such settlements, in which companies pay token fines and agree to disagree with their regulators, but avoid admitting to any actual wrongdoing.
More crackdowns to come
As such, it's a good start for CFPB, which characterizes the Capital One case as its first "major" enforcement action -- and promises more to come. Capital One, after all, is hardly the only card company to have been hawking these products.
Reportedly, CFPB is also looking into similar allegations at Discover
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